Statement Prepared for EPA Public Hearing on Proposed Carbon Pollution Standards
By

James 

### F. Casey Associate Professor of Economics

Washington and Lee University

May 24, 2012 Washington D.C.

Good Evening, my name is James 

### F. Casey. I am a Professor of Economics at Washington and Lee University in Lexington, Virginia. My primary area ofteaching and research is environmental economics and policy. Today, on behalfofthe Union ofConcerned Scientists, Iwould like to express mysupportfor the standardsto limit carbon emissions from new power plants. I hope the EPAwill move quicklyto finalize and implement limits on carbon emissions from new power plants. Then, take the next, critical, step and issue standardsto reduce carbon emissions and all greenhouse gas emissions (GHGs) from all existing power plants. In the brieftime I have this evening Iwill explain why I advocate this set ofactions.

A quick question -Whatdo Paul Krugman (the Nobel Prize winning economics professorat Princeton University) and Greg Mankiw (Professorof Economics at Harvard who serves as an advisorto Mitt Romney and isthe author of a best selling economicstextbook) have in common?

Aside from having Ph.Ds in economics-- not much. One might even argue that they currently representthe polemics of liberal and conservative economicthought, yet they both wantto regulate and reduce greenhouse gas emissions-- and they are not alone. Icertainly stand with both ofthem on this policy objective.



### 101 fact, in Apri: of 1997, morethan 2,000 economists signed the Economists' Statement on Climate Change. Again, in March of2010, more than 2,000 scientists and economists (including myselfand several of mycolleagues atWashington and Lee) endorsed the Union ofConcerned Scientists' call for "swift and deep cuts in greenhouse gas emissions." Why? Because adherents to standard economictheory recognize the negative side effectsgenerated by greenhouse gases, which predisposes them tofavor strong environmental protection.

Economists generally believe free markets are the most efficientway to direct consumption and investment decisions in an economy as long asthe prices are right. Unfortunately energy markets gettheir prices wrong. Producers andconsumers do not payforthe damage ofburning the fuels traded in these markets. Due to these massive external costs, prices are set inefficiently low and pollution levels, particularly GHG emissions, are inefficiently high

- much too high. Internalizing the externalities associated with carbon emissions is an important step toward creating a more economic system.

Additionally, according to a2009 reportfrom the World Coal Association, "climate change is a global challenge and requires a concerted global response. The world
can be set on course to a sustainable energyfuture, provided we make the necessary investments and policy decisions." By choosing to set limits on the amount ofcarbon emitted from power plantsthe Environmental Protection Agency is beginning to set us on such a course. Not only will the limits reduce future emissions, butthey provide an incentive forthe private sectorto make the necessary investments to reduce the negative environmental footprint that characterizes our current economic behavior.

Climate change has already altered ourenvironment, and with it the pattern of diseases. Let me be clear, this is a scientificfact, it is not in dispute. Those that claim climate change has had little it any substantive impact are ignoring the scientific evidence on this topic. -Unfortunately no one is more vulnerable to the adverse health consequences that accompany climate change generated by greenhouse gases than young children. In recent years, they have had to battle an increasing numberof respiratory illnesses, allergies, infections, and immunosuppresive disorders,justto name afew, according to the Centerfor Health and Global Environment at Harvard University.

We cannot continue to allowforthe unregulated release of GHGs into our atmosphere. The United States musttakethe lead in the battle to reduce the costs and impacts associated with Climate Change- especiallythe costs being placed on our children. The new EPA carbon standards are a critical step toward reducing the effects ofclimate change and protecting public health. Thus, the time has come to support EPA in its importantwork to protect and ensure the health and safetyofour nation.